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Thoughts on predistribution and B-BBEE: lessons from trade union investment companies and ESOPs in South Africa

Thoughts on predistribution and B-BBEE: lessons from trade union investment companies and ESOPs in South Africa

Presentation provides an update on a paper on trade union investment companies and ESOPS in South Africa. The paper discusses these options for broad based empowerment in the context of concept of redistribution and predistribution in South Africa. The presentation was delivered at a webinar organised by the South Centre for Inequality Studies at the University of the Witwatersrand. The paper is available at https://mistra.org.za/mistra-media/return-to-workers-trade-union-investment-companies-and-esops/

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Ebrahim-Khalil Hassen

March 24, 2021
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  1. Thoughts on predistribution and B- BBEE: lessons from trade union

    investment companies and ESOPs in South Africa Ebrahim-Khalil Hassen https://ekh.co.za
  2. Overview Conceptual and Overall Outcomes ESOPs and Trade Union Investment

    Companies Options
  3. Distribution

  4. Distribution Redistribution Predistribution

  5. Distribution Redistribution The distribution of something in a different way,

    typically to achieve greater social equality Predistribution
  6. Distribution Redistribution The distribution of something in a different way,

    typically to achieve greater social equality Predistribution Pre-distribution (or Predistribution) is the idea that the state should try to prevent inequalities occurring in the first place rather than ameliorating them via tax and benefits once they have occurred, as occurs under redistribution.
  7. Distribution “black box” - capitalism, choices, colonialism, continuities, causality, complexities

    of race, gender Redistribution The distribution of something in a different way, typically to achieve greater social equality Predistribution Pre-distribution (or Predistribution) is the idea that the state should try to prevent inequalities occurring in the first place rather than ameliorating them via tax and benefits once they have occurred, as occurs under redistribution. See https://policynetwork.org/publications/papers/education-pre-distribution- and-social-justice/ for the original usage of the term “predistribution”
  8. Distribution “black box” - capitalism, choices, colonialism, continuities, causality, complexities

    of race, gender Redistribution The distribution of something in a different way, typically to achieve greater social equality Predistribution Pre-distribution (or Predistribution) is the idea that the state should try to prevent inequalities occurring in the first place rather than ameliorating them via tax and benefits once they have occurred, as occurs under redistribution.
  9. Source: StatsSA % share of Top Ten Largest Companies Oligopoly

    and…
  10. 23.2 23.0 25.1 24.8 25.0 25.0 25.2 26.4 26.7 27.7

    26.7 27.6 30.1 30.9 30.4 34.9 35.9 36.0 36.1 35.1 36.1 36.3 36.4 36.7 38.0 39.7 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Official Expanded Linear (Official) … unemployment … and ... Source: StatsSA
  11. … “state capture” … Source: https://brandanreynolds.com/

  12. Broadest Levels • Broad based empowerment is not “happening” •

    Structure of production • Employment • Unemployment are young, African, Female, Rural • Located in a type of capitalism that does not support broad based BEE • Is that a self-evident conclusion? • Consider how Treasury responds to this by seeking to increase investment and efficiencies? • Consider also proposals for Radical Economic Transformation (RET) ostensibly aimed at land reform being proposed by “alleged” rent-seekers?
  13. Can we design better pre- distribution systems? Trade Union Investment

    Companies and ESOPS
  14. Key Findings Examples of ESOPs and TUI companies having high

    values • NUM, NUMSA, CEPPAWU, SACTWU – above R3billion • Clicks and Kumba Iron both delivered large payments But an “alternative to oligopolistic capitalism”? Concept of return-to-workers
  15. Paper available at https://mistra.org.za/mistra-media/return-to-workers-trade-union- investment-companies-and-esops/

  16. Alternative to Capitalism? • TUIC – cited as reasons for

    trade union implosion • CEPPAWU, SAMWU, FAWU, POPCRU • Experiences suggest “capture” unions • Difficult to understand the storyline • Investments in finance and gambling • Better experiences: • NEHAWU attempts to support cooperatives • NUMSA Investment adopts a “VC” approach • MIC has a system for transferring funds to members • SACTWU staving off retrenchments • BUT, BIG PICTURE – TUIC have been divisive to union solidarity
  17. Options

  18. Distribution Redistribution Predistribution Society Wide Company (e.g. 1% of retirement

    funds into a renewable energy company) Extend Support for ESOPS (maybe through taxes) Trade Union Investment Companies - Debate to be won in unions/ defund TUIC? Asset Based Redistributions (Not Only Land) Linking economic incentives to job creation initiatives. Other linking mechanisms between predistribution and redistribution Shift instruments such as Stokvels, small businesses, towards “productive activities”